Should A Prudent Lender Consider Financing Infrastructure Projects In Developing Countries?
Despite the huge requirement for infrastructure in developing countries, they get only a small share of project financing. Lenders got wary especially after the Asian financial crises began in 1997. Other considerations are political risks and other risks that are peculiar to non recourse lending. When considering a proposal to finance an infrastructure project in developing countries the prudent lender needs to identify, allocate and seek to mitigate these risks. This paper looks at selected project finance risks and suggests that the ability of infrastructure projects to attract lenders depends on the mitigation of the identified risks and on the project sponsors who will in addition to demonstrating the ability to carry out the project successfully need to put together a bankable project, fully backed by themselves, the host government, and multilateral development agencies.
